ABHAY A VAKIL, MUMBAI V. ACIT 10(3), MUMBAI

ITA 2483/MUM/2010

• Counselvise Citation: 248319914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: H N SHAH
• Keywords: Salary income

Judgement Text

1 ITA 2483 /M/2010 A BHAY A. VAKIL. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAND A, A.M. ITA NO. 2483/MUM/2010 ASSESSMENT YEAR 2007-08 ABHAY A VAKIL, GEETANJALI, 9 N GAMADIA ROAD, MUMBAI 400026. PAN AAAPV 3613Q VS. ACIT 10(3), AAYAKAR BHAWAN, MUMBAI 20. APPELLANT RESPONDENT APPELLANT BY SHRI H.N. SHAH RESPONDENT BY SHRI P.K.B. MENON ORDER PER R.K. PANDA A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DT. 22.02.2010 OF CIT(A)- 22, MUMBAI RELATING TO A.Y. 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. ADDITION TO OTHER INCOME ` 2,54,000/-. 1.1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 22 MUMBAI HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE A. C.I.T. 10(3) MUMBAI AMOUNTING TO ` 2,54,000/- AS INCOME FROM OTHER SOURCES ON THE ASSUMPTION THAT THE APPELLANT EMPLOYS 4 SERVANT S AND DRIVERS AT AN ANNUAL SALARY OF ` 5,04,000/- SHOWN BY THE APPELLANT. THE APPELLANT SUBMITS THAT NEITHER THE ASSESSING OFFICE R NOR THE CIT(A) HAD ANY BASIS FOR CONCLUDING THAT SALARY OF EACH SE RVANT AND DRIVER BE ` 6,000/- PER MONTH. 1.2 THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE SAID SALARY WAS PAID OUT OF FAMILY TOTAL CASH WITHDRAWALS OF ` 8.4 LACS. 2 ITA 2483 /M/2010 A BHAY A. VAKIL. 1.3 THE LD. CIT(A) ALSO ERRED IN NOT CONSIDERING T HE FACT THAT THE APPELLANT WAS PROVIDED A CHAUFFER DRIVEN CAR BY HIS EMPLOYER AND THE SAME WAS TAXED IN HIS SALARY INCOME AS PERQUISITE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THERE WAS A SEARCH ACTION IN ASIAN PAINTS GROUP IN WHICH THE ASSESSEE IS A DIRECTOR. DURING THE SEARCH IT WAS FOUND THAT THE ASSESSEE WAS KEEPING THREE CARS AND ALSO IN OCCUPATION OF 3000 SQ. FT. FLAT AND RESIDING IN A POSH LOCALITY OF MUM BAI. THE A.O. FURTHER NOTED THAT LOOKING TO THE LIFE STYLE AND THE LOCALITY IN WHICH THE ASSESSEE IS RESIDING, THE HOUSEHOLD EXPENSES SHOWN BY THE ASSESSEE IS NOT IN TANTAMOUNT WITH THE LIFE STYLE IN SUCH AREA. THE A.O. NOTED THAT IN A. Y. 2005-06, ADDITIONS HAD BEEN MADE AT THE RATE OF ` 5,000/- PER MONTH ON ACCOUNT OF SALARY PAYMENT TO DRIVERS AND SERVANTS. SINCE THERE IS A GAP OF 2 YE ARS, THE A.O. ALSO TOOK 20% INCREASE AND MADE ADDITION OF ` 2,54,000/- CONSIDERING ` 6,000/- PER MONTH SALARY PAYABLE FOR 3 DRIVERS AND 4 SERVANTS AFTER A LLOWING SET OFF FOR AMOUNTS DISCLOSED BY ASSESSEE AT ` 2,50,000/-. 3.1 IN APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SU BMITTED THAT THE A.O. HAS FAILED IN NOT CONSIDERING THE FACTS UNDER APPEAL AN D HAS JUST FOLLOWED THE RATIO APPLIED IN THE PRECEDING YEAR. IT WAS SUBMITTED TH AT THERE WERE ACTUALLY 6 EMPLOYEES I.E 4 SERVANTS AND 2 DRIVERS AGAINST THE PRESUMPTION BY THE A.O. OF EMPLOYEES I.E 4 SERVANTS AND 3 DRIVERS. SIMILARLY, ASSESSEES FAMILY CONSISTS OF 4 MEMBERS ONLY OUT OF WHICH ONE WAS ABROAD AND ACCO RDINGLY CASH WITHDRAWAL OF ` 8,40,000 IS SUFFICIENT ENOUGH TO MEET THE ACTUAL S ALARIES PAID TO 4 SERVANTS AND 2 DRIVERS. ACCORDINGLY IT WAS PRAYED THAT ADDI TION MADE OF ` 2,54,000/- MAY BE DELETED. 3.2 THE LD. CIT(A) RELYING ON THE ORDER FOR A.Y. 20 05-06 AND 2006-07 OF HIS PREDECESSOR UPHELD THE ACTION OF THE A.O. AGGRIEVE D WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3 ITA 2483 /M/2010 A BHAY A. VAKIL. 4. AFTER HEARING BOTH THE SIDES, WE FIND THE TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 HAS DELETED THE DISALLOWANCE MADE BY THE A.O. BY HOLDING AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION A S ALSO THE FACTUAL MATRIX OF THE CASE. IT CAN BE SEEN FROM THE CHART F ILED BY THE ASSESSEE SHOWING WITHDRAWALS FOR THE PERIOD FROM 1.4.2005 TO 31.3.2006, THE WITHDRAWALS ON ACCOUNT OF HOUSEHOLD EXPENDITURE ARE ADEQUATE. THE ASSESSING OFFICER HAS MADE ADDITION ASSUMING THAT T HE AVERAGE SALARY OF ` 1971/- PER PERSON PER MONTH IS VERY LOW. EVEN THE LEARNED CIT(A) COULD NOT ADDUCE ANY COGENT MATERIAL CONTRARY TO THE CLAIM OF ASSESSEE FOR CONFIRMING THE ADDITION SO MA DE BY THE ASSESSING OFFICER. IN CONSIDERED VIEW, THE AD-HOC ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) IS WITHOUT ANY BASIS AND UNREASONABLE. CONSEQUENTLY, WE SET A SIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION SO MADE BY HIM AND RECOMPUTED THE INCOME I N THE LIGHT OF OUR DIRECTION. 4.1 SINCE THE TRIBUNAL IN ASSESSEES OWN CASE HAS D ELETED THE ADHOC ADDITION MADE BY THE A.O. IN THE IMMEDIATELY PRECEDING ASSES SMENT YEAR, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE AND RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE SET ASIDE T HE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION. THE GROUND S RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE I S ALLOWED. ORDER PRONOUNCED ON 27.07.2011. SD/- SD/- (N.V. VASUDEVAN) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 27.07.2011. RK 4 ITA 2483 /M/2010 A BHAY A. VAKIL. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 22, MUMBAI 4. THE CIT-10. MUMBAI 5. THE DR BENCH, A 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 5 ITA 2483 /M/2010 A BHAY A. VAKIL. DATE INITIALS 1 DRAFT DICTATED ON 21.7.11, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 22.7.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER